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• 1. What is the Medically Needy program?
• 2. Who can get Medically Needy benefits?
• 3. How much property can I have?
• 4. Can I give away property to become eligible?
• 5. How much income can I have?
• 6. What income does DSHS count when it calculates my excess income?
• 7. What is the "MN expense amount"?
• 8. When does Medically Needy coverage begin?
• 9. How do I choose between a 3-month and a 6-month base period?
• 10. What will the Medically Needy program cover?
• 11. How do I apply for the Medically- Needy program?
• 12. What expenses count toward my MN expense amount?
• 13. How do I use my card?
• 14. If I qualify for the Medically Needy program, will DSHS pay my Medicare premiums?
• 15. A possible alternative to Medically Needy coverage for workers with disabilities who are under 65
• Medically Needy Worksheet

This pamphlet is accurate as of its date of revision. The rules change frequently.  

1. What is the Medically Needy program?

The Medically Needy (MN) Medicaid program helps pay medical expenses for certain people who are 65 or older and for certain younger people with disabilities.  It's a program for people who don't get the Medicaid coverage that comes with a cash grant from Supplemental Security Income (SSI), General Assistance, or another public assistance program.  The MN program is run by Washington's De­partment of Social and Health Services (DSHS).  It is sometimes called the "spend-down" program.

If you qualify for the Medically Needy program, you can get Medicaid coverage once your medical expenses reach a certain amount.  In this pamphlet, we call this "the MN expense amount."  How this amount is calculated is explained in section 7 below.  The calculation takes into account how much more income you have than you would have if you were on SSI.  It also takes some other things into account.

The MN expense amount is sometimes called a "spend-down obligation," or just a "spend-down."  Those words are not used here because they sometimes cause confusion.  They make some people think that money has to be spent on medical expenses before the expenses can be counted toward the MN amount.  This is not true - a medical bill does not need to be paid before it can count toward the MN expense amount; it only needs to be incurred.  An expense is incurred as soon as legal responsibility for the expense arises. 

So, if you see a doctor and you are billed $100 for the visit, you have incurred a $100 expense.  On the other hand, if you have simply been given a statement for a product or service that has not yet been provided (so you don't yet have any legal responsibility to pay for it), then you have not yet incurred an expense. 

This pamphlet only discusses the pro­gram for adults who are disabled or who are 65 or older.  Children and pregnant women may also qualify for the Medically Needy program under somewhat different rules.

2. Who can get Medically Needy benefits?

You may be eligible for benefits if:

• You are 65 or older or disabled, and

• You are a U.S. citizen or meet certain immigrant-status requirements, and

• Your income and property (resources) are limited in the ways explained in Sections 3, 4 and 5 below.

3. How much property can I have?

You can have any kind of property, including cash, bank accounts and stocks, if the total value of your property is not more than $2,000 for an individual or $3,000 for a couple.  In addition, you can have a home of any value (which can be a house or mobile home and all surrounding land, or a condominium) as long as you live in it or intend to return to it.  You can have household furniture and other household goods, as well as clothing and jewelry for your personal use and personal care items. 

Also, you can have a car of any value, if it is used for transportation either for you or for another member of your household.

4. Can I give away property to become eligible?

Giving away property may affect your future eligibility for Medicaid-funded long-term-care services, including nursing-home care and in-home care.  It may also affect your eligibility for SSI.  It will not make you ineligible for the non-institutional Medically Needy program, which covers medical services that are not considered long-term care.

5. How much income can I have?

There is no restriction on how much income you can have when you apply.  But the more income you have, the more medical expense you will have to incur before coverage will start.  DSHS rules set aside a certain amount of your income to pay for non-medical expenses such as food and shelter.  (The amount corresponds, roughly, to what you would have if you received SSI.)  And, when it calculates how much of your income to set aside for non-medical expenses, DSHS does not count every dollar of income you receive.  So it is important to learn what counts and what doesn't.  (This is explained in the answer to Question 6 below.) 

Under DSHS rules, a single person can have $637 of countable income set aside for non-medical expenses.  When both members of a married couple apply, the total countable income set aside for non-medical expenses for the couple is only $637.  When only one member of a couple applies, however, each spouse can have $637.   Countable income above this amount is referred to as "excess income."  If you live in an adult family home or an assisted living or adult residential care facility, you can have the amount of income necessary to pay for care in the facility, plus a small personal needs allowance set by DSHS.  Countable income above this total will be considered "excess income."

6. What income does DSHS count when it calculates my excess income?

It's easiest to answer this question by looking first at what income DSHS does not count.  Here are some important examples of income that is not counted for purposes of calculating excess income:

• DSHS disregards $20 of income for each individual or couple.  (If both spouses are applying, there is only one $20 disregard.)

• If an individual applicant, or an applicant's spouse, has income from work ("earned income") part of that income will be disregarded.  DSHS will not count the first $65 of earned income, and will not count half of any additional earned income above the first $65.  (So, for example, if you have $265 of monthly income from work, only $100 of it will be counted when calculating excess income: $265 minus $65 = $200; half of $200 = $100.) 

• DSHS will not count the income needed to pay certain health insurance premiums. 

• "In-kind support" is not counted as income for purposes of the MN program.  In-kind support includes food, clothing or shelter that is given to you or that you receive because someone else pays for it.  So, for example, if someone pays your rent for you, the payment results in in-kind support; it will not count as income, and will not affect your eligibility for the MN program. (It would affect any SSI benefit.)   By contrast, if someone gives you cash to pay your rent with, the cash received will count as income.

7. What is the "MN expense amount"?

The MN expense amount (or "spend-down" obligation) is the amount of medical expense you must incur within a specified period of time to qualify for Medically Needy program benefits.  You can choose a time period - called a "base period" - of either three or six months. 

If your base period is 3 months, your MN expense amount will be 3 times your monthly excess income; if your base period is 6 months, your expense amount will be 6 times your monthly excess income.  Usually, the base period begins the first day of the month in which you apply for MN benefits.

Here is an example that shows how the MN expense amount is calculated:

• Jane is an unmarried applicant.  Her only income is Social Security of $700.  She has no medical insurance.  After $20 is disregarded from her total income, she is left with $680 countable monthly income.  From this, she subtracts $637 (see answer to Question 5) to get her monthly "excess income" of $43.  So, if she chooses a 3-month base period, this means her MN expense amount will be $129; if she chooses a 6-month base period, her expense amount will be $258. 

To qualify for MN benefits, you must incur medical expenses that equal your MN expense amount before the end of the 3 or 6-month base period.  In general, more expenses will be covered if you reach the MN expense amount earlier in the period rather than later. 

8. When does Medically Needy coverage begin?

In general, for each base period, bills incurred on or after the day you meet the MN expense amount may be covered.  But if hospital expenses meet the full expense amount, then coverage should extend back to the first day of the base period, so that bills incurred any time within the base period may be covered. 

• For example, Jane has a $100 MN expense amount for a 3-month base period.  On the first day of the base period, she incurred a pharmacy bill of $50.  On the second day, she incurred a doctor bill of $100.  (The doctor provided a medical service and billed Jane, but no payment was made.)  With the doctor bill, she reached her MN expense amount.  So the doctor bill, which was incurred on the day the expense amount was reached, may be covered by the MN program.  (Note: if Jane had waited and incurred the pharmacy bill on the same day as her doctor visit, both expenses might have been covered by the MN program.)

In this example, the doctor billed the patient.  By incurring the expense, the patient reached the expense amount.  Consequently (once the patient submitted the bill to DSHS and received her Medicaid identification card), the doctor could submit the bill to DSHS for payment.  But what if Jane had paid the bill?

If Jane had already paid the bill, the doctor is only permitted to bill DSHS if he or she first refunds the payment to Jane. 

Under DSHS rules, as interpreted by the Department, the doctor (or other Medicaid provider) may, but is not required to, refund a payment corresponding to an expense used to reach the expense amount.  This means that, in some cases, whether or not a medical expense will be paid for by Medicaid will depend on whether a medical provider is willing either to not collect from you for the service that has been provided (and to bill DSHS), or to refund a payment already made (and to bill DSHS). 

Since at least 2002, DSHS staff has been reconsidering what should be done with certain expenses incurred on the day the MN expense amount is reached.  The expenses in question are those in which part or all of the expense is needed to reach the expense amount.  Until some time in 2002, the Department required providers to refund any payment made by a client on the first day of the certification period and to bill the Department.  Then the Department started to leave it up to the provider as to whether to refund a payment and bill the Department.  As a matter of policy, the Department now takes the position that an expense used to meet the expense amount is the responsibility of the individual client; but in practice its system does not give individuals or medical providers a way to split bills incurred on the first day of the certification period.  The Department is working toward a system under which such expenses would be split, with responsibility allocated between the client and the Department.  But there is not likely to be a system in place to handle such splitting of expenses in the near future.  Until a new system is in place, the Department is expected to continue to pay bills that are incurred on the first day of the certification period, if they are submitted by a provider.

A doctor or other Medicaid provider is required to refund a payment for an expense not needed to reach the expense amount, if the service was provided within the MN certification period (the period of coverage). 

So, for example, if Jane in the previous example has to pay Medicaid providers for additional products or services that should be covered by Medicaid between the time she reaches the expense amount and the time she gets her identification card,  those providers would be required to refund such payments and bill DSHS.

Sometimes, the Medically Needy program can cover in the 3 months before the month in which you apply, if you were eligible in those months.  To determine eligibility for this earlier period, DSHS would treat that 3-month period as a separate base period and calculate a MN expense amount for that period.

For an approximate calculation of your MN expense amount, you can use the budget worksheet at the end of this pamphlet.

9. How do I choose between a 3-month and a 6-month base period?

The DSHS staff should help you decide which base period is best for you.  You will need to look at what your MN expense amount will be in either case.  Then you will need to estimate what your medical expenses are likely to be.  In general, it is more convenient to have a longer base period; but sometimes a shorter period will result in more complete coverage.

• For example, John's monthly excess income is $30.  This means his MN expense amount would be $90 for a 3-month base period, or $180 for a 6-month period.  John plans to apply for the Medically Needy program next month, and he expects to have a $100 doctor visit early in the month.  (The base period ordinarily begins with the first day of the month of application.) 
  
  If John chooses a 3-month base period, he will reach the MN expense amount ($90) on the day of the doctor visit - and that bill may be paid by the Medically Needy program (if the doctor will submit it), along with all other bills for services the program covers for the rest of the 3-month period.  But if John chooses a 6-month base period and the $100 doctor bill is the first medical expense during the period, the bill would not be enough to reach the 6-month MN expense amount ($180) and no part of it would be covered (unless the entire expense amount was met by hospital expenses later in the month). 

10. What will the Medically Needy program cover?

The Medically Needy program will cover the following medical services:

• physician services
• inpatient hospital services
• outpatient hospital services
• rural health clinic services
• adult dental care (including den­tures)
• clinic services
• home health care
• prosthetic devices
• laboratory and x-ray services
• eyeglasses
• in-home personal care (under somewhat different rules)
• nursing home care (under somewhat different rules)
• care in an adult family home, assisted-living facility or enhanced adult residential care facility (under somewhat different rules)

The Medically Needy program also covers prescription drugs.  However, for individuals eligible for Medicare Part D, that program must be used for most prescription drugs.

The Medically Needy program may also pay the cost of transportation needed to obtain other covered services. 

11. How do I apply for the Medically Needy program?

If you want to use the Medically Needy program, you should take the following steps:

A.   Fill out the DSHS application form.  You must apply in writing.  You can pick up an application at a local DSHS office, or call to ask to have an application sent to you.  You should get a response within 45 days.  If you have "excess income," the response should tell the amount of your MN expense amount for the three- or six-month period you have chosen.  (It will refer to the MN expense amount as your "spenddown.")

B.    Collect and turn in copies of all medical bills to DSHS.  Once you have had medical expenses equal to the MN expense amount, you should show the bills, as well as any payments made by Medicare or other insurance, to the financial worker at the local DSHS office.  The DSHS office will issue you a Medicaid identification card.  It will show the date on which coverage began (which will be before the date the card is issued).  You can then use the card for medical expenses incurred on or after the date shown on the card and before the end of the base period.  (If you have already paid a bill for an expense the MN program would cover on or after the date on the card, you may ask the doctor or other Medicaid provider to reimburse what you have paid and bill DSHS.  If the bill was used to meet your MN expense amount, the Medicaid provider may reimburse your payment and bill DSHS, but is not required to do so.)

 C.   Reapply every three or six months.  At the end of your base period, you should receive an eligibility review form in the mail.  You may re-apply by filling out and mailing in that form.  If you don't receive a form in the mail at least a month before your eligibility runs out, you should call DSHS and ask to have one sent to you.  You should not have to go to the DSHS office for an in-person interview.  When you have completed the form, you can send it back by mail.  The DSHS office will notify you of your new MN expense amount.  Once you have met it, and turned in your bills, a new Medicaid identification card will be sent for the applicable part of the new 3 or 6-month period.

12. What expenses count toward my MN expense amount?

The following expenses can be used to reach your MN expense amount:

1. Medicare and other health insurance deductibles, co-insurance charges, fees or co-payments, as well Medicare (but not other health-insurance) premiums

2. medical expenses that would not be covered by the MN program but that were for items or services provided or prescribed by a licensed health care provider

3. medical expenses incurred within the base period, potentially payable by the MN program, whether or not paid by the applicant, as well as the cost of transportation for medical services (mileage is calculated at $0.485 a mile if you must drive to obtain services)

4. medical expenses from before the beginning of the base period that are still owed by the applicant

5. medical expenses (in the categories listed above) of a family member (legally or blood-related) living in the same household as the applicant

When considering how you will reach your MN expense amount, here are some useful things to remember:

1. You must only show that you have incurred medical bills that are not covered by Medicare or other insurance.  The bills can be unpaid.  However, if you have simply been given a statement for a product or service that has not yet been provided (so you don't yet have any legal responsibility to pay for it), then the statement does not represent an incurred medical expense.

2. When possible, plan how you will reach your MN expense amount.  If you have a choice about when you incur some of your expenses that can be covered by the MN program, try to group them on one day if that will allow you to meet your expense amount on that day.  That way they might be covered.  Otherwise try to schedule them on or after the day you will be able to reach your expense amount.

3. Before you reach your MN expense amount, try to purchase needed medical services that the Medically Needy program will not cover first.  (These expenses will still count toward your MN expense amount if they are provided or prescribed by a licensed health-care provider.)  When possible, put off incurring expenses that may be covered by the MN program until the day you will be able to reach your MN expense amount or later.  Then, once you get your Medicaid identification card, you will be able to use it to pay for the items or services covered by the Medically Needy program.

4. If you incurred medical bills in the 3 months before your application, you can apply for retroactive MN coverage for that earlier 3-month period.  (Or, if they are still unpaid and were never used to meet an MN expense amount requirement, you can use them to reach your current or future MN expense amounts.)

5. Unpaid medical bills from before the current base period can be used to reach your current MN expense amount if they weren't used to reach an expense amount in an earlier base period. If only part of an old bill is used to reach your MN amount in one period, the rest of the bill can be used for another period, if you can show that the bill is still owed.  Since these bills are for expenses incurred before the base period, the MN program will not pay them.  But they will help you get other bills covered.

6. You should keep copies of all papers showing medical expenses and insurance reimbursements.  This includes bills for doctor visits, prescription medication, hospital and nursing care.  It also includes expenses that are not usually covered by private medical insurance, such as medically necessary transportation. 

7. If you have health insurance, other than Medicare, and you pay the premiums, the expected cost of your premiums will be counted in calculating your excess income (and will lower your MN expense amount).  Deductibles and coinsurance are counted as medical expenses.  If your MN expense amount is less than the cost of your private health insurance premiums, you should seek advice from a Senior Information and Assistance program, or from the Statewide Health Insurance Benefits Advisor (SHIBA) program of the State Insurance Commissioner (at 1-800-397-4422).  They should be able to help you analyze the cost and coverage of your present policy and the potential advantages and disadvantages of dropping your present health coverage.

8. If you paid a Medicaid provider for an item or service payable by the MN program, and the expense was incurred on or after the date you met the expense amount, then you may be entitled to reimbursement.  If the expense was incurred after the expense amount was already met, so it was not used to meet the expense amount, then reimbursement is required.  If it was used to meet the expense amount, then reimbursement is permitted but not required.  (It is up to the provider.)  You should show the Medicaid identification card to the provider and ask that the provider reimburse you and bill DSHS.

13. How do I use my card?

To use the Medically Needy program you must go to a medical care provider who accepts Medicaid.  Check with your doctor or pharmacist or other health care providers to make sure they accept Medicaid before you receive any care.

To use the Medicaid identification card, just show it to your doctor, nurse or pharmacist or other provider each time you need medical care.  They will bill DSHS directly for the cost of the services.  When you use your card for drugs or medical services, you should not be obligated to pay any part of the cost.

14. If I qualify for the Medically Needy program, will DSHS pay my Medicare premiums?

Yes.  If you qualify for MN coverage you will be eligible to have your Medicare premiums paid under one of the State's Medicare Savings Programs.

If you have Medicare coverage and your monthly countable income is below $867 for a single person or $1,167 for a couple, then you are eligible for the Qualified Medicare Beneficiary (QMB) program.  Under QMB, DSHS pays your Medicare premiums, co-payments and deductibles for Medicare-covered services.  The Medically Needy program would still cover any services not covered by Medicare, such as prescription drugs, after you reach your MN expense amount.

If you have Medicare coverage and your monthly countable income is too high to qualify for QMB but is below $1,040 for a single person or $1,400 for a couple, then you are eligible for the Specified Low-Income Medicare Beneficiary (SLMB) program.  Under SLMB, DSHS pays your Medicare Part B premiums.

If your countable income is too high for SLMB but is below $1,170 for a single person or $1,575 for a couple, and you receive no other Medicaid, then you are eligible for the Qualified Individual program (QI-1).  Under QI-1, DSHS pays your Part B premiums. 

If you don't qualify for QMB, SLMB or QI-1, but you are eligible for MN or other Medicaid coverage and are eligible for Medicare Part A coverage, then you may be eligible for the State-Funded Buy-In program.  That program pays your Part B premium, and any Part A or Part B coinsurance, deductibles or co-payments. 

If you are eligible for a Medicare Savings Program, the Medically Needy program will still cover services not covered by Medicare, and co-payments for Medicare services, after you reach your MN amount.

15. A possible alternative to Medically Needy coverage for workers with disabilities who are under 65

If you work, have a disability and are under 65, you may wish to consider a new program instead of the Medically Needy program.  It is called "Healthcare for Workers with Disabilities" (HWD).  HWD offers Medicaid coverage for a monthly premium based on your income.  In some cases, premiums are lower than the MN expense amount would be.  There are income limits but no resource limits.  And HWD covers personal care services (not covered by MN).   Also, HWD clients who are also Medicare eligible will have their Medicare Part B premiums covered. More information is available from DSHS or on its web site at the following address:

fortress.wa.gov/dshs/maa/Eligibility/HWD.htm

MN 4-08 (3-24-08)

This publication provides general information concerning your rights and responsibilities. It is not intended as a substitute for specific legal advice.
This information is current as of the date of its printing, April 2008 .

Note: Do not use this worksheet if your spouse has earnings from work and is not applying.

A.  Calculate unearned income: this includes what you and your spouse receive from Social Security, Veterans benefits, other employment pensions, interest from savings, etc.

1. Enter your total unearned monthly income received from all sources.
2. Subtract $20.00.	-   20.00
3. Enter the  result here, and on line C.1 on the next page.  This is your countable unearned income.

B.  Calculate earned income: this includes gross earnings from your work or training and net earnings from your self-employment.  (Do not use this worksheet if your spouse has earnings and is not applying.)

1. Enter your gross monthly earnings from work or training (the amount before any withholding).
2. Enter your net monthly earnings self-employment (the amount received after all business expenses are subtracted).
3. Add gross earnings from B.1 and net earnings from B.2, and enter the result.
4. Subtract $65.00.	-  65.00
5. Enter the result (all earnings less $65).
6. Divide the amount on line 5 by 2.
7. Subtract $20 only if you had no unearned income and did not already subtract $20 in A.2 above.
8. Enter the result here and on line C.2 on the next page.  This is your countable earned income.

C.  Determine Medicaid eligibility

Note the Medicaid income standard in the table below that applies to you.

number of persons	amount
one person	637.00
couple applying together	637.00
couple with only one spouse applying	1,274.00

1. Enter your countable unearned income from line A.3.
2. Enter your countable earned income from line B.8.
3. Add the amounts in  C.1 and C.2 and enter the total.
4. Enter the total amount you will have to pay for Medicare premiums or other health insurance premiums for the base period you choose of 3 or 6 months.
5. Divide the amount in C.4 by 3 or 6, depending on the number of months in the base period you choose and enter the result.
6. Subtract the amount in C.5 from the amount in C.3 and enter the result.
7. Enter the amount of the Medicaid income standard that applies to you from the table above.
If the amount in C.7 is as much as, or more than, amount in C.6, you are eligible for Medicaid with no expense amount and should apply.
8. If the amount in C.6 is more than the amount in C.7, then subtract the amount in C.7 from the amount in C.6 and enter the result.  This result is your excess income.
9. Multiply your excess income from C.8 by 3 if you choose a 3-month base period or by 6 if you choose a 6 month base period.	x 3 or 6
10. Enter the result.  This is your MN expense amount for the base period.

You should apply for MN benefits if you think the medical expenses that can be used to reach your MN expense amount will be more than the amount entered on line C.10.